This invention relates generally to banking system processes and more particularly to generation and processing of substitute checks in connection with the “Check21” check truncation system.
The federal Check Truncation Act enacted in 2003 (commonly referred to as “Check21”) inaugurated sweeping changes in the handling of paper checks by the banking industry and its customers. According to traditional practices, a paper check passes from the drawer to the payee to the payee's bank, then through clearing channels to the drawee bank and thence after cancellation and payment back to the drawer. Check21 , however, facilitates “truncation” of the paper check. That is, a party at or downstream from the payee may withhold the paper check from further handling, and may instead pass an electronic image data representation of the original check through the banking channels in lieu of the paper check. In some cases the electronic image data representation is used downstream in the banking channels to print a substitute paper check (sometimes referred to as an “IRD” or “image replacement document”) for further processing. As to the original checks, these may be discarded after being held in storage for a certain period of time.
Efforts to prevent fraud in connection with checks have resulted in conventional practices in which one or more security features may be included in checks. Such features may include microprinting, printing with magnetic ink (e.g., MICR), holograms, etc. However, the check scanning processes currently proposed for check truncation typically fail to capture any security features incorporated in the original checks. Also any substitute paper check generated downstream in the process subsequent to check truncation may also lack any indication of security features in the original check. Consequently, the check truncation process may inhibit detection and/or investigation of fraudulent checks and/or verification of the legitimacy of original checks.